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Political budget cycles and election outcomes

  • Jeroen Klomp
  • Jakob Haan

    ()

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    This paper addresses two empirical questions. Is fiscal policy affected by upcoming elections? If so, do election-motivated fiscal policies enhance the probability of re-election of the incumbent? Employing data for 65 democratic countries over 1975–2005 in a semi-pooled panel model, we find that in most countries fiscal policy is hardly affected by elections. The countries for which we find a significant political budget cycle are very diverse. They include ‘young’ democracies but also ‘established’ democracies. In countries with a political budget cycle, election-motivated fiscal policies have a significant positive (but fairly small) effect on the electoral support for the political parties in government. Copyright The Author(s) 2013

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    File URL: http://hdl.handle.net/10.1007/s11127-012-9943-y
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    Article provided by Springer in its journal Public Choice.

    Volume (Year): 157 (2013)
    Issue (Month): 1 (October)
    Pages: 245-267

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    Handle: RePEc:kap:pubcho:v:157:y:2013:i:1:p:245-267
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